A friend and myself a couple years back called on a add for a large apt complex for sale. We went out there and there were 8 apts for 100k each… If I remember correctly, about 70% occupancy rate and some of the renters were month to month. One of the apts totally needing remodeling.
I don’t have the numbers of what it cashflowed per month but the guy was willing to Lease Option for I think like 10 years with a ballon payment I think in the 2 or 3 year.
The reason I passed it up is because 1… First Deal and was afraid 2. Wasn’t the best part of town and has known drug stuff going on.
3. Wasn’t too sure about buying apts where some of the folks were on month to month…
Looking back now… I would like any and all advice…
Couldn’t I have just hired a property managing company to come in and deal with it for 10%…
Just like any advice period. I have thought about that deal for a while… No money down. I also don’t remember why the guy wanted out… I know him and a buddy did all the maintenance themselves and had a bunch of other properties…
Thanks anyone for any advice at all…
JCinIN
One of the main reasons were I was just scared but I have to start somewhere somehow or I will never start…
Without all of the numbers (or at least more of them), it is very difficult to say. This may have been a property to pass on for a whole litany of reasons – perhaps it already has a negative cashflow and adding a 10% management fee won’t help that!
The way that I read your post is that the place was $800K and 30% of the apartments were vacant – this sounds like an aligator!
I don’t know where this complex is but the rents would need to run almost $1,000 per unit and the units almost all be full to be positive…
I’m thinking that when you add the needed repairs and the drug/hoodlum problem, you did the right thing.
Thanks for the responses you guys. Some other thoughts that I had were that the Apts were in an area of town that is not really developing. I think about that aspect now, but I didn’t think about it then.
As far as cash flow, I don’t remember…
I actually may just call the guy back if I can find his number. He is a fairly big hitter in this area and was cool to talk to. Might be a good mentor for me…
Anything else you guys have I will glady read. I want this now more than ever…